Free Essay: An Analysis of the Causes and Effects of Income Inequality in India
Income inequality in India
India is regarded as one of the fastest growing nations in the world. As a strong emerging economy, India has experienced an average of 8% economic growth in terms of GDP growth during the 2000s. In fact it is ranked as the 10th richest nation in the world.
Despite this rapid growth, India has had high levels of income inequality. It is estimated that the richest 20% populace in India now make 12 times more of what the poor 20% populace does. In addition to this, the income growth of the rich and the middle class Indians has grown by 9% since the 1990s. The World Bank estimated the Gini Coefficient of India to be 0.33 in 2012.
Causes of income inequality in India
There are many reasons attributed to this unequal distribution of income and resources in India. Poor policies by the government top the list of why there is high inequality in income distribution in India. In the past decade, the government has reduced spending on important sectors such as agriculture, health and education. The government has thus neglected these areas and caused disparities between the levels of poverty in different regions in the country.
The government of India has been accused of concentrating on capital intensive industries such as finance, insurance and real estate industries and hence created gaps in levels of income in different industries. These capital intensive industries usually require employees who are more skilled as compared to the labor intensive industries. This neglect has contributed largely towards the disparities in income and earnings amongst skilled and unskilled laborers who make up majority of India’s populace.
The high levels of corruption in India have also been blamed for the huge gap between the rich and the poor. Even though in some instances, the government has set aside money for projects for the poor, corruption is a huge barrier to the access of these funds. The people in charge of steering such projects often consume more than half of it before it gets to the poorer regions.
Poor infrastructure has widened the gap between the rich and the poor. Most companies and schools as well as essential social amenities have been located in areas with good infrastructure. The poor regions have remained dilapidated.
Effects of income inequality in India
These income disparities have had many socio-economic impacts on India’s population. It is estimated that 300 million Indians live in abject poverty. This is the largest number in the world and is one of the major impacts of income inequalities in the country. India also has the highest number of homeless people.
Additionally, the gap between the rich and the poor has created “Club States” with Gujarat, Punjab and other rich states forming the richest clubs, whilst Madhya Pradesh, Orissa, Bihar and other such states being left behind in terms of development.
Access to social amenities such as decent shelter, clean water, nutrition and food as well as healthcare and education has become difficult for the poor in India. The situation is the exact opposite in the rich regions. Healthcare access has worsened amongst the poor with high maternal and infant mortality rates being experienced in the poorer regions.
The list above on causes and effects of income inequality in India is inexhaustible. With changing conditions we cant say things will remain as they are but those are some of the major reasons for the inequality in income distribution in the Asia subcontinent.
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References
http://blogs.lse.ac.uk/indiaatlse/2013/03/27/why-inequality-in-india-is-on-the-rise/
http://www.newindianexpress.com/columns/Reverse-Economic-Inequality/2014/03/06/article2092672.ece